TORONTO – When we talked to David Purdy about two weeks ago, Rogers still hadn’t quite settled on a brand name for the broadband video portal it will launch this year.
It probably won’t be called the “Purdy Portal” as CRTC commissioners dubbed it back in March during the Regulator’s New Media Hearing. We’re betting the name of the company founder will be in there somewhere, but the impromptu working title is an apt one for now since Purdy, RCI’s vice-president of video product management (yes, he’s in charge of video distribution across all platforms), has been the driving force behind it.
As Cartt.ca was first to report last year, the big wireless carrier, MSO, broadcaster and publisher will unwrap a new video portal which aims at being more than “Hulu for Canada” as some have dubbed it. It aims at preventing the Napsterization of the television business in Canada.
“Our number one goal is to make our subscription television products more relevant to customers,” said Purdy. “We want to lift all boats… that includes CTV, Canwest, Corus, Astral, the little guys.”
And those content companies are buying in. Purdy says Rogers has 13 signed letters of intent from broadcasters and content providers and that long-form contract negotiations are in the works.
The notion is that Rogers is going to offer customers access to all content on all of the TV channels they pay for on whatever device they want it – wherever they happen to be. “If you’re not in your living room, you’re still going to get the benefit of watching TV on your PC, or on your mobile,” he said.
But it’s not about streaming linear television everywhere. It’s about making the content customers already pay for with their Rogers Cable subscription available to them, on demand, all the time.
If it was just about streaming linear TV, Rogers would just have the makers of Slingbox weave their technology into the Rogers set top boxes (and the Sling folks have been in to 333 Bloor St. E. in Toronto asking to do just that, btw). It’s deeper than that.
As an owner of a Slingbox, it’s pretty cool technology. I can call up my own TV from afar – but I am at the mercy of local WiFi connections wherever I am – and using the virtual remote can be more than a little clunky. “Accessing video on demand by Sling is… suboptimal,” says Purdy.
What Rogers is launching is a premium, high quality video portal where the popular content is cached as close to the consumer as possible, which not only makes the viewing experience – however they view it – more enjoyable, it also reduces the transport costs for broadcasters “down to almost zero,” says Purdy.
“The broadcasters can actually get their content to the customer in a much more efficient and cheaper way – and the quality of service would be improved, too.” They’d also be able to target their advertising using aggregate data and analytics provided by Rogers.
And where does the Big Red Machine make its margin on this project? The same way. Reducing its own transport costs, as a churn reducer for customers who might choose to stick with Rogers in order to access the new video portal, and maybe even cutting down on some of the P2P traffic on their network as people find a legitimate place to see The Simpsons. Not to mention increased potential for growing its own ad revenues, and perhaps “even the ability to do commerce,” says Purdy.
The key to all of this though is to make sure there is some way to authenticate that customers can access the portal and that it’s not open to everyone. And, the customers will only be able to access the content they are already paying for through their cable bill. If they only have basic cable, the content from those channels is all that will be available to them through the Purdy Portal.
Rogers – and other MSOs – have concentrated largely on one big word: authentication. Is was on everyone’s lips last month in Washington during the National Cable Telecommunications Association Cable Show. Among North American cable companies, Rogers has taken the lead on how they can authenticate that whomever is accessing the content is already a paying customer.
“It was really vindicating for Rogers in the sense that we were working on this project for two years,” said Purdy, who was featured on a panel at The Cable Show.
The problem Purdy sees with sites like Hulu, where content from Fox, ABC and NBC Universal is available for free (with a few ads) and Comcast-owned Fancast (same thing, free vids, some pre and post-roll adverts), is “the challenge we had mentally is that they don’t complement the subscription revenue stream.”
Those sites offer mostly OTA broadcast content and not the premium content available on Discovery or ESPN.
Not that ad-supported online video can’t work, or is necessarily a bad idea, believes Purdy. “But if you take specialty channel content, we’re used to having a dual revenue stream, both subscription and advertising. So, why would you undermine that dual revenue stream and not link it back to being a subscriber to the actual service?” he asks.
Back to authentication though. When a consumer is out of town, that type of thing can be taken care of with encryption and a password (although it looks as though if a Rogers customer is out of the country, the content owners are holding firm that it’s not going to be available, due to copyright concerns). What Purdy and the other MSOs have been working on is making sure that if a paying customer is in their home, they can watch TV on their laptop or iPod, without that extra step.
“We don’t feel a password should be required. We should be able to authenticate the modem… We should be able to know that Greg O’Brien is accessing his own products… and recognize the unique address of the modem,” explains Purdy.
“Most of the studios have said ‘this is completely fine if somebody’s in Calgary and they’re a subscriber in Toronto… where they’ve expressed concern is if they’re in Washington… There is a border issue.
“But I think over time, everyone is going to recognize that Greg O’Brien, no matter where he is in the world, should be able to get access the content he has paid for at the time and place of his choosing,” he adds.
The alternative, which is all too clear to oft-geo-gated Canadians, “is someone who has missed their favourite show goes to Limewire or some other over-the-top provider which is not respecting intellectual property rights where nobody is getting paid for that viewing… that, to me, is the great threat.”
So Purdy has spent a lot of time over the past many months talking to people in the recording industry, seeing first hand how their businesses were severely eroded by many of the same forces.
“The only way we can prevent (a similar thing happening in TV here) is by providing a legitimate alternative – and one that is fair for the customer, respects the value chain, but also respects the customers’ needs, which are evolving,” he says.
Since popular sites like the ones we’ve already mentioned – and many others – are geo-gated here in Canada (meaning if you’re here, you can’t see Family Guy in Hulu), the incentive to go around the system and download what you want to see is higher here than it is Stateside where there are numerous legit places to grab shows from sites where the producer and broadcaster is making a bit of money, at least.
And with far fewer legitimate places to find a lot of favourite shows on demand in Canada, the peer-to-peer traffic here is 25% higher than in the States, said Purdy at the Cable Show in Washington. “And 99% of that is illegitimate.”
“The notion that because I missed the airing of my favourite show means… I’m just not going to see that episode, or I have to pick them up in reruns or something, is just not going to fly.”
Besides thousands of hours of content, Purdy’s portal will also feature a number of advanced navigation features where customers can personalize their space, view and make recommendations and link through social media sites like Facebook as well.
“We should be able to provide a more compelling experience because it’s more intuitive, it’s based on the customer’s propensity to watch and purchase,” he notes. “So we’re able to take that and provide a more personalized experience.”
Customers might also like the fact the portal won’t subject users to unwanted ads and spyware, which is the cost of visiting many of the shadier places to download video on the net.
That’s not to say there won’t be ads in the content found in the Rogers portal. There certainly will. But it will be targeted, sold by the broadcasters or content creators, and new ads can be shuffled in and out of the content, unlike video in the regulated cable network, where the rules don’t yet allow for dynamic ad insertion which would maximize ad-targeting capabilities.
Canadian broadcasters, said Purdy, are hopping on board with this – and eagerly. “Some of the broadcasters and broadcast ownership groups have been fantastic. They’ve been embracing new platforms and have recognized that the on demand opportunity adds value to their brand.”
The struggle right now for specialty owners is to find the right mix of what’s available on the web at no charge and what remains behind the distributor subscription wall. “We have to prove to the broadcasters that linking it back to the subscriber channel is better for them than just making it free on the web,” says Purdy.
“If you take enough of the core service and make it so available that you’re actually getting people to think about turning off their television subscriptions then you’ve got a problem.
“If I owned a specialty channel in tier II let’s say… and somebody said you could make this content available on demand, online, to the entire base, everybody’s who’s got broadband internet service… or you can make it available to the 85% of the people (who subscribe to tier II)… so now you’re not hurting your subscription revenue… I’d do that deal every time. I’d take 85% in subscription revenue stream in a heart beat.
“And I think most of the programmers are recognizing that. The big thing they want to know is ‘do we sell the ads?’ Yes, they sell the ads. They’re their ads to sell. This is their advertising revenue stream. It’s not us breaking into the advertising revenue game,” explains Purdy.
Astral in particular, want into this portal, he says. Which certainly makes sense because with its many pay-TV channels, it is far more reliant on boosting – or at least maintaining – the value proposition of the subscription TV model – because the TMN and Mpix multiplexes don’t have any advertising.
“They want an online extension of TMN,” said Purdy. “For them, it’s critical… they recognize that Entourage and Californication and these shows are ones people want to be able to, if they miss an episode, be able to get caught up.
“The faster we move to this blended value proposition, where it’s TV anytime, anywhere… the less likely we’re going to see cannibalization or commoditization.”
